Rare earth magnets are now a global power battleground, with China controlling the lion’s share of supply and other nations scrambling to break the monopoly

Resource security when it comes to rare earth magnets is something the modern-day world has been desperately trying to get right. This is primarily due to rare earths’ increasing importance in electronics, defense, vehicles, and much more. 

For years, countries have been seeking ways to secure access to these vital resources. However, 90% of the current supply is in the hands of China, whose relationship with the U.S. and other countries has not been ideal of late. Despite best efforts, many nations remain dependent on Beijing for their rare earth needs. Now, that could be starting to change.

Rare Earth Magnets More Critical Than Ever

These days, almost every progressive nation covets rare earth magnets due to their ability to deliver exceptionally strong magnetic force in compact sizes, enabling the construction of high-efficiency motors and miniaturized components. This is what allows them to power essential systems in electric vehicles, wind turbines, smartphones, medical devices, and defense equipment.

The magnets possess unique properties, such as heat resistance, which makes them even more critical in applications where performance and precision are crucial. So, as global industries shift toward electrification and automation, rare earth magnets have become strategic assets, with supply chain control increasingly viewed as a matter of national security.

China’s Dominance Remains an Issue

Once again, China controls about 80% of rare earth magnets production. In total, the country produces over 200,000 tons of magnets annually, which accounts for the vast majority of the global supply. In contrast, North America and Europe together manufacture fewer than 2,000 tons, while Japan and Vietnam contribute about 25,000 tons.

Until about six months ago, the supply of these magnets from China to the rest of the world was going on well. Then Beijing decided to pull the plug and suspend exports to some of its key trading partners, including the U.S. and the European Union, in an apparent warning against proposed tariffs on Chinese electric vehicles. Since then, China has allowed limited exports, but it still maintains tighter controls to reinforce its geopolitical influence.

E.U. Import Up, U.S. Down

Now, newly released data shows that the EU’s purchase of rare earth magnets increased in August this year, while imports to the U.S. declined. According to news agency Bloomberg, this points to concerns over resource security, as the European nations face the sharpest strain from tightening global magnet supplies.

Meanwhile, analysts caution that intensifying trade tensions may further jeopardize access to these critical materials, threatening to derail Europe’s green technology goals and undermine its industrial competitiveness.

In total, exports from China to the EU went up 21% in August, reaching 2,582 tons. At the same time, deliveries to the U.S. dropped 5% month-over-month, touching about 590 tons. The EU’s dependence on these magnets is clearly going north as the data showed that, year-to-date, imports from China had tripled compared to the U.S. According to experts, this serves to underline a larger shift in global supply dynamics.

New Western Production is Coming, Eventually

For now, it seems China’s dominance in rare earth magnets will continue. According to a report in the New York Times, the U.S. is trying to play catch-up with the Eastern nation. But despite these new efforts, the vast majority of the world’s magnet supply still originates from Chinese refineries.

The U.S. currently has four domestic magnet factories nearing completion. Meanwhile, in neighboring Canada, Neo Performance Materials just launched a major facility in Narva, Estonia. This site nearly doubles European and the U.S. production capacity and could scale to 5,000 tons. However, the NYT report also states that the full ramp-up will take years.

North America and Europe collectively purchase close to 40,000 tons of rare earth magnets each year. Therefore, setting up magnet factories in the U.S. and some other countries seems to be one way out of the China predicament.

However, China’s dominance is rooted in decades of investment and near-total control over rare earth processing. It manufactures most of the world’s refining equipment and employs nearly all the specialized technicians. Some analysts say it will take years—even a decade—to break this stranglehold completely.

https://oilprice.com/Metals/Commodities/Rare-Earth-Magnets-Have-Become-the-New-Battleground-for-Global-Power.html